The FCC has spent a lot of time the last few months congratulating itself on how quickly it is moving on the transition to the Internet Protocol (IP) network. After all, it is about to conduct experiments that will provide real-world experiences for both consumers and carriers and it is about to create a “testbed” to solve the crucial numbering issues in inherent in an all IP world. There is a lot to like in what the Commission is doing.

However, the Commission’s failure to resolve the thorny regulatory policy issues involved in the transition to IP is well on its way to creating a mess for the industry and will almost certainly slow the technology transition. As we have discussed many times, the Commission has failed to establish rules for carrier IP interconnection. It has not even established how IP interconnection agreements will be negotiated.  In addition, the Commission has not explained how the current inter-carrier compensation system will apply during the multi-year network transition or how it will apply going forward in the all IP world. Finally, future prices for special access, a service which will take years to phase out and is still vital to many carriers, are still in limbo, while the Commission awaits an okay to unleash its massive data request from the Office of Budget Management. With so many policy issues still undecided, it is no surprise that regulatory questions are now beginning to complicating the proposed transition experiments. 

On March 4, 2014, we provided a description here of the proposed Iowa Network Services (INS) experiment designed to study the impact on customers and rural communities of the conversion of its voice centralized equal access (CEA) service provided over a Time Division Multiplexed (TDM) network to a network using IP.  We noted that that this is one of a series of experiments that would enable the Commission to ensure continued public safety, reliability and universal connectivity as the network transition to IP proceeds. 

On March 21, 2014 the industry had its first chance to comment on the INS experiment, and while a few carriers such as Sprint offered support, major ILECs such as AT&T and CenturyLink raised significant concerns with the proposal. Their concerns arise from the fact that while the Commission made clear in the Technology Transition Order (Docket 13-5) that it did not intend to resolve any of the significant policy issues in these experiments, both large ILECs argue that the INS proposal does just that, assuming a number of regulatory issues have already been decided.

For example, AT&T states that the experiment assumes that centralized equal access will be a part of the IP world.  However, this is questionable because:

[I]t is not clear whether the concept of equal access itself, to the extent it is even relevant in today’s world, will survive the transition. As a legal matter it is at best questionable whether any equal access obligations that are now captured in the provisions of the Telecommunications Act of 1996 (“1996 Act”) will apply in an all IP environment. For example the dialing parity requirement established in section 251(b)(3) is imposed on “local exchange carriers.” Thus, insofar as a VoIP provider would not be providing that service as a common carrier and no longer will provide telephone exchange service or exchange access, it no longer would be subject to that obligation. The provision also would be inapplicable to VoIP service, which is by its nature distance—agnostic, because it is not properly classified as “telephone exchange service” or “telephone toll service.” (AT&T Comments at p. 3).

Moreover, both AT&T and CenturyLink note that the INS proposal for continued centralized equal access assumes an extension of the existing inter-carrier compensation structure for TDM-based networks,despite the Commission’s intent to not use these experiments to decide such issues now. In the INS experiment, its existing access rates for TDM traffic would continue to apply even after its transition to IP.

And while much of what AT&T and CenturyLink argue about the INS experiment is clearly self-serving, since they are really arguing for regulatory intervention in an IP world, the Commission’s failure to lead on policy issues will allow all carriers to object to various aspects of the IP transition as they argue for their own self-interests. It would more than behoove the Commission to confront the policy issues first before the industry soon finds itself in an IP transition quagmire.

By Andrew Regitsky, President, Regitsky & Associates